Cotton: NCC Chair Pushes to Bring Cotton Back into ARC and PLC Programs

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Ronnie Lee, Georgia cotton producer and National Cotton Council chairman told members of  the House Ag Subcommittee on Tuesday (4/4)  that the U.S. cotton industry is still seeking to get cottonseed designated as a covered commodity and eligible for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs – a move that will serve as a bridge until new farm law is enacted. 

Lee emphasized to the General Farm Commodities and Risk Management subcommittee the strong need to bring cotton back into the farm law’s Title I commodity policy as it “is the only program crop that does not have any long-term price or revenue protection policy in the farm bill.” He said the move would enable cotton producers to access the risk management tools that provide protection during prolonged periods of depressed market conditions.

Farms and businesses directly involved in the production, distribution and processing of cotton employ more than 125,000 workers and produce direct business revenue of more than $21 billion. Accounting for the ripple effect through the broader U.S. economy, direct and indirect employment surpasses 280,000 workers with economic activity of nearly $100 billion.

More on Cotton

While current cotton futures market prices have increased from year-ago levels, many producers continue to struggle with prices at levels not adequate to cover all production costs. USDA 2016 data shows that 19% of cotton farms are considered either highly or extremely highly leveraged.

The NCC stance on multiple topics was covered in the testimony, including:

  • An ongoing cotton industry priority is maintaining a properly functioning marketing loan program that helps ensure orderly marketing and flow of cotton to the market.
  • The current definition of ‘family member’ used for actively engaged provisions in the farm bill should be broadened to ensure extended family members are not forced out of the family farm simply because they do not fit within an arbitrary definition for ‘family member.’
  • The need for adjustments to the extra-long staple loan program and competitiveness program and steps to improve crop insurance and conservation programs, which are integral parts of many producers’ operations and achieve the goal of improving and protecting the environment while also improving farming operations.
  • The Risk Management Agency (RMA) needs to improve quality loss provisions that have proved inadequate for many producers in the Southeast region who suffered through extensive rains during the 2015 and 2016 harvest seasons.
  • The RMA has not implemented the Enterprise Units by practice provision in the manner intended by Congress and it should be reconsidered by USDA, and if necessary, further clarified in the next farm bill. The EU practice is a crop insurance component – important in the Southwest region and allowed in the 2014 farm law.
  • New farm law should continue to fund the Economic Adjustment Assistance Program (EAAP). First authorized in the 2008 farm law, the EAAP is helping to stabilize the U.S. textile manufacturing sector and help it remain competitive.

Polyester vs. Cotton

Lee’s also told the Subcommittee that the tremendous increase in low-priced polyester production has created extraordinary hurdles for increasing global cotton demand.

“In the past decade, (global) cotton mill use fell by 12 million bales, and polyester production capacity increased by 145 million bales,” Lee testified. “Excess production capacity is contributing to artificially low polyester prices in key Asian markets such as China and India.”

With 75% of U.S. raw cotton now being exported, Lee testified that the NCC strongly supports additional investment in USDA’s Market Access Program and Foreign Market Development programs. He said these trade promotion programs “are highly successful public-private partnerships that help leverage industry funds to open and expand export markets.”

The NCC’s testimony also called for continuing cotton’s research and promotion program (check-off program) as this effort generates a positive return ($7 for every $1 contributed) for U.S. cotton producers and cotton product importers at no cost to taxpayers

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